Fox challenges cord-cutters by sticking TV shows behind paywall

If you've made a habit of watching TV shows from Fox online the day after they …

Those who enjoy Fox shows such as Family Guy, Glee, or The Simpsons will soon have to wait an extra eight days if they want to watch new episodes online—or prove that they're a paying cable or satellite subscriber. Fox made the announcement on Tuesday, saying that it would begin putting next-day streams of popular shows behind a paywall.

The changes go into effect on August 15. At that time, Fox and Hulu will stop putting Fox's shows up the day after they air on broadcast TV. Instead, those who subscribe to the DISH Network service will be able to log into DISH's website in order to "authenticate" themselves and see the shows immediately online. The company says that DISH will be the first partner for the new system, but that other cable and satellite providers will be "coming soon." Paying Hulu Plus subscribers will also be able to log into Hulu and see the shows the day after they air.

Those who don't subscribe to cable, satellite, or Hulu Plus will have to wait more than a week before their favorite shows come online—assuming those viewers don't watch those shows for free (with ads) when they broadcast on normal television. Indeed, the fastest way to see the latest Glee would be to watch it the old-fashioned way (or on a DVR), but Internet users have become accustomed to finding their shows online the day (or sometimes a few days) after broadcast. In fact, that was practically the entire reason for Hulu's launch: it offered Internet users a way to watch their favorite shows soon after they aired, but on demand and on the Internet, while providers were able to make some extra ad dollars from users who were not watching their shows on broadcast TV to begin with.

Needless to say, fans of Fox shows aren't happy with the news, and Fox knows it. "We understand that there may be consumers that are unhappy," Fox's president of affiliate sales Mike Hopkins told the Wall Street Journal. "If this works, you're going to see a lot more content online."

And it's likely that Fox is just the beginning. ABC is reportedly considering the same move, according to "people with knowledge of the discussions" speaking to the New York Times, and the WSJ says that CBS has also supposedly engaged in such talks with TV providers. In an e-mailed note seen by Broadcasting & Cable, Bernstein Research analyst Craig Moffett implied Fox's move was a signal of things to come for online video, calling it an "unmistakable straw in the wind."

What caused Fox, and presumably others, to become gun-shy about putting ad-supported content online for free? "We're concerned that cord-cutting is going to be a problem," Hopkins said. The networks have long feared a small but growing group of Internet users who have completely ditched their TV subscriptions in favor of over-the-air and online video; the Convergence Consulting Group published a report last year saying that cord-cutters represent less than three percent of those who watched TV online in 2009, but that number was expected to double by 2011.

Six percent or less is still a small fraction of the overall market, and a recent survey revealed that a large majority of people keep their cable or satellite subscriptions around so they can watch live sports. So, while cord-cutting may be en vogue among Internet hipsters (I say this with love, as I cut the cord five years ago), most of America seems to be fine with taking things slow. It doesn't seem like Fox has anything to worry about just yet, but it's no secret that the online ad market is nowhere near as blingy as the broadcast ad market.

Because of this, TV networks have turned to partnerships with cable or satellite networks in order to promote both offerings and force users to stay dependent on TV subscriptions—a risky move to push on those who are already leaning away from subscription TV. When it's still so easy to find high-definition TV shows—next day and without ads—on P2P networks like BitTorrent, what motivation does a cord-cutter have to begin forking over a monthly fee again?